Does this behavior look like a market that is pricing-in a Fed rate hike? Total Schizophrenia...
And if you're wondering what catalyzed this latest 350 point ramp in The Dow? Perfect bounce on Friday off the Payrolls cliff edge... and machines then auctioned stocks up to Friday's cliff edge in search of sellers...
The above is all there is to this brief Zero Hedge article that appeared on their website at 12:16 p.m. EDT on Monday afternoon---but the three embedded charts are worth the trip. Today's first story is courtesy of Dan Lazicki.
Stan Druckenmiller is betting on the unexpected.
The billionaire investor, who has one of the best long-term track records in money management, is anticipating three market surprises: an improving economy in China and rising oil prices. He also doesn’t expect the Federal Reserve to raise interest rates in 2015, a move most investors are forecasting will happen in September after six years of keeping them near zero.
“My fear is that we won’t see anything for a year and a half,” Druckenmiller, speaking of an interest rate increase, said in a Bloomberg Television interview. “I have no confidence whatsoever that we’ll see a rate hike in September or December.”
Druckenmiller, who now runs a family office after closing his Duquesne Capital Management hedge fund in 2010, has repeatedly criticized the Federal Reserve for keeping interest rates near zero for too long. He told an audience at the Lost Tree Club in North Palm Beach, Florida, on Jan. 18 that monetary policy has been reckless.
This story, along with an embedded 42:20 minute video interview, appeared on the Bloomberg website a week ago---and it's courtesy of reader Ken Hurt. He says it's a "good one"---and I'll take his work for it, as I haven't watched it.
DoubleLine Capital’s Jeffrey Gundlach, the bond manager who has beaten 99 percent of his peers over the past five years, said the full impact of the Federal Reserve’s “extreme policies” have yet to be felt in the market.
The Fed has been “very well-intentioned,” Gundlach said, speaking in an interview on Sunday on Wall Street Week. “The ultimate consequences of all these extreme policies have yet to be felt and will be felt.”
The central bank has kept rates in the U.S. near zero and embarked on unprecedented monetary stimulus since the 2008 financial crisis. Known for his contrarian views and top returns, Gundlach said rating the Fed very highly at this point is “sort of like a man who jumps out of a 20-story building, and after falling 18 stories, says, ‘So far, so good.’”
Gundlach, who manages the $46.2 billion DoubleLine Total Return Bond Fund, has beaten 99 percent of peers over the past five years, according to data compiled by Bloomberg. He said last month that if the Fed increases interest rates by mid-year, they would have to reverse course. On Sunday, he said that the probability of a rate increase by the Fed in June is very low, because the economic data doesn’t support such a move.
This Bloomberg article showed up on their Internet site at 9:48 a.m. on Sunday morning EDT---and I thank West Virginia reader Elliot Simon for sending it.
Backers of the World Bank and International Monetary Fund are called on to remain vigilant against monetary shocks like the low price of oil, the banks said.
The IMF and World Bank issued a joint statement following their annual spring conference in Washington. The meeting came as global economic dynamics are shifting in an era of lower oil prices, a key barometer of economic health.
Both institutions said the global economy this year is growing faster than in 2014, though rates of growth are uneven.
Both banks issued a call on supporting countries to ensure they have effective policies in place to protect against "adverse shocks" like lower oil prices.
This UPI story, filed from Washington, was posted on their website at 8:17 a.m. EDT yesterday---and it's the first offering of the day from Roy Stephens.
The International Monetary Fund has sounded the alarm on the exorbitant levels of debt across the world, this time literally.
The theme trailer to its fiscal forum on the 'political economy of high debt' plays on our fears with the haunting tension of a Hitchcock thriller. A quote from Thomas Jefferson flashes across the screen in blood-red colours: "We must not let our rulers load us with perpetual debt."
We learn that public debt in the rich economies fell from 124pc of GDP at the end of Second World War to 29pc in 1973, a dream era that we have left behind.
The debt burden has since climbed at a compound rate of 2pc a year, accelerating into an upward spiral to 105pc of GDP after the Lehman crash. It is as if we had fought another world war.
When the IMF starts to quote Thomas Jefferson, you just know that there's big trouble in River City. This must read Ambrose Evans-Pritchard commentary appeared on The Telegraph's website at 3:30 p.m. BST on their Sunday afternoon---and it's courtesy of Roy Stephens.
Readers of this publication will know that for some time, I’ve forecasted the creation of a new monetary system by which governments and banks gain total control over all monetary transactions.
On the surface of it, this may seem an impossible goal, as it would be so all-encompassing and would eliminate economic freedom entirely. Surely, it would not be tolerated. However, I believe that it’s not only relatively easy to create, but it will be sold in such a way that the public will see it as an absolute panacea to their economic woes. Only those who are far-sighted will understand its level of destruction in advance of its implementation.
It might transpire like this:
This commentary by Jeff Thomas appeared on the International Man website yesterday---and I thank their senior editor, Nick Giambruno, for sending it our way.
It is no exaggeration to use an F-word to describe Vancouver’s current real estate scene. As in, the market is in a Frenzy.
Observers describe a perfect storm of forces coming together to create a tempestuous result: A 5.8-per-cent jobless rate in B.C., low interest rates, a devalued Canadian dollar attracting more foreign buyers, and panic over prices going even higher if buying is delayed. Even the particularly vicious winters of recent years in Eastern Canada may be having an impact.
Meanwhile, the Bank of Canada warned last Wednesday about the risk of correction in three Canadian property markets — Vancouver, Toronto and Calgary.
For the moment, few are heeding the caution. A press release sent out last week by WestStone Properties, regarding its Evolve condominium project in Surrey, reported sales in a single day (April 11) of 300 condo units, worth $70 million.
This article appeared on the Ottawa Citizen website on Sunday sometime---and my thanks go out to Roy Stephens.
Finland is the unlikely stage for the latest turn in Greece’s interminable debt drama this weekend.
With events having decamped temporarily to Washington D.C., Athens will be keeping half an eye on developments in Helsinki, where the Nordic state of just 5.4m people heads for the polls on Sunday.
In the five years since Greece’s financial woes were revealed to the world, it has been sleepy Finland which has emerged as the most trenchant critic of EU largesse to the indebted Mediterranean.
The outcome of the country’s general election could now determine Greece’s future in the monetary union.
This news item showed up on the telegraph.co.uk Internet site at 1:30 p.m. on Saturday afternoon BST, which was 8:30 a.m. in New York.
Thousands of people marched in Berlin, Munich and other German cities on Saturday in protest against a planned free trade deal between Europe and the United States that they fear will erode food, labor and environmental standards.
Opposition to the Transatlantic Trade and Investment Partnership (TTIP) is particularly high in Germany, in part due to rising anti-American sentiment linked to revelations of U.S. spying and fears of digital domination by firms like Google.
A recent YouGov poll showed that 43 percent of Germans believe TTIP would be bad for the country, compared to 26 percent who see it as positive.
The level of resistance has taken Chancellor Angela Merkel's government and German industry by surprise, and they are now scrambling to reverse the tide and save a deal which proponents say could add $100 billion in annual economic output on both sides of the Atlantic.
This Reuters article, filed from Berlin, put in an appearance on their website at 2:30 p.m. EDT on Saturday afternoon---and I thank Orlando, Florida reader Dennis Mong for finding it for us.
Swiss pension schemes will be bankrupt within 10 years unless Switzerland's government wins public support for a radical overhaul of the retirement system, experts have warned.
The pressure on Switzerland's occupational pension system, which accounts for SFr800 billion ($840 billion) of assets, has intensified this year due to recently imposed charges on cash accounts and shrinking government bond yields.
Martin Eling, professor of economics at the University of St Gallen, estimated that occupational pension funds will face a SFr55 billion hole in their funding by 2030 if the government does not overhaul the system.
This Financial Times article was posted in the clear in a GATA release on Sunday.
Russia has denied providing up to €5bn to Greece for a planned gas pipeline, in a move that would significantly ease Athens' cash crisis.
According to reports in Der Spiegel, Moscow was ready to provide advanced payment to Greece in assent for its "Turkish Stream" project.
The magazine quoted a senior Syriza minister saying the deal would "turn the tide" for the debt-stricken country, and could be signed as early as Tuesday.
However, the Kremlin later denied it had reached an agreement for any financial aid in advance of future profits from the pipe's transit fees.
This news story appeared on the telegraph.co.uk Internet site at 4:30 p.m. BST on Saturday afternoon in London---and I found it over at the gata.org website.
The European Central Bank has warned that a rupture of monetary union and Greek exit from the euro could have dramatic consequences, but insisted that it has enough powerful weapons to avert contagion.
Mario Draghi, the ECB's president, said it would be far better for everybody if Greece recovers within EMU but made it clear that the currency bloc is no longer vulnerable to the immediate chain-reaction seen in earlier phases of the debt crisis.
Greek sources have told The Telegraph that Syriza may sign a deal with Russia for Gazprom's "Turkish Stream" pipeline project as soon as next week, unlocking as much as €3bn to €5bn in advance funding.
This confirms a report in Germany's Spiegel magazine, initially denied by both the Russian and Greek governments. It is understood that the deal is being managed by Panagiotis Lafazanis, Greece's energy minister and head of Syriza's militant Left Platform, a figure with long-standing ties to Moscow.
So, dear reader, which is it? Will $5 billion be forthcoming from Russia or not? Stay tuned to this ongoing soap opera/saga/farce---you pick. This Ambrose Evans-Pritchard article was posted on The Telegraph's website at 10:00 p.m. BST on Sunday evening---and it's worth reading. My thanks to Roy Stephens for sending it.
By the standards of his frenzied schedule here last week, the meeting on Friday between Yanis Varoufakis, the Greek finance minister, and Lee C. Buchheit, the dean of international debt lawyers, was a quiet one.
There was none of the media scrum that had followed Mr. Varoufakis around town during the semiannual meetings of the International Monetary Fund and World Bank, as he paid calls on the I.M.F. chief, Christine Lagarde; the head of the European Central Bank, Mario Draghi; the United States Treasury secretary, Jacob J. Lew, and even President Obama.
But the get-together with Mr. Buchheit carried critical meaning, according to experts here. After all, it was Mr. Buchheit who helped broker Greece’s most recent debt refinancing, in 2012.
As Greece now gropes for a resolution to its current financial problems, the meeting suggests Athens might still be holding out hope for a restructuring of its debt burden of 303 billion euros, or $327 billion.
Not a word in this story about Russia, gas, or the $5 billion dollars. That doesn't entirely surprise me as it was posted on The New York Times website---and it appeared there on Sunday sometime. It's another offering from Roy Stephens.
Earlier today, following weeks of speculation, Greece finally launched the first shot across the bow of capital controls, when it decreed that due to an "extremely urgent and unforeseen need" (ironically the need was quite foreseen since about 2010, but that is a different story), it would be "obliged" to transfer - as in confiscate - "idle cash reserves" located across the country's local governments (i.e., various cities and municipalities) to the Greek central bank.
Several hours later the decree which was posted in the government gazette has finally percolated among the population, and the response to what even ordinary Greeks realize is now the endgame, is less than exuberant.
Bloomberg reports, that "as Greece struggles to find cash to stay afloat, local authorities say they oppose a government decision to use their reserves for short-term financing."
“The government’s decision to seize our reserves not only raises legal and constitutional issues, but also a moral one,” said George Papanikolaou, mayor of Glyfada, the third-largest municipality in the metropolitan region of Attica after Athens and Piraeus. “We have a responsibility to serve our citizens,” Papanikolaou said by phone on Monday. Glyfada has about €16 million in cash reserves, he said.
This story appeared on the Zero Hedge website at 3:54 p.m. yesterday afternoon---and I thank Dan Lazicki for bringing it to our attention.
Commenting on the arrival of 300 U.S. paratroopers in Lviv, western Ukraine, former U.S. diplomat and Senate staffer James Jatras told Radio Sputnik that the initiative risks undermining the fragile peace in eastern Ukraine, and does absolutely nothing for U.S. security interests.
Late last week, U.S. paratroopers from the 173rd Airborne Brigade began a six-month training rotation with Ukrainian National Guard forces. Commenting their arrival, Jatras explained that "it's quite clear that these [drills] are intended to increase the combat effectiveness of the Ukrainian forces."
This, according to the expert, "could be understood as something that is directly meant to undermine the Minsk II agreement, and to support those elements in Kiev who still believe there is a military solution to the political problem in eastern Ukraine."
This article put in an appearance on the sputniknews.com Internet site at 8:00 p.m. Moscow time on their Monday evening, which was 1:00 p.m. EDT in Washington. I thank Jim Skinner for sending it our way.
I recently returned from Istanbul, Turkey. I had the opportunity to meet with a director of the central bank, along with stock exchange officials, regulators, major investors and one of Turkey’s wealthiest men, Ali Ağaoğlu, a flamboyant property developer known as “the Donald Trump of Turkey.”
I also spent time with everyday citizens from store owners to taxi drivers and more. Invariably, such a range of contacts produces information and insights beyond those available from conventional research channels and buy-side reports. It was a great chance to gather market intelligence on the world’s eighth-largest emerging market.
If you visit Istanbul, you cannot help but be impressed with the indelible beauty of the city. It’s easily on a par with Paris, Venice and other beautiful cities of the world. Istanbul also has more than its share of history, having witnessed the rise, fall and clash of empires from late-antiquity Romans, through Greek Byzantines, Ottoman conquerors and Persian rivals. The mix of East and West, Christian and Muslim and old and new is like no other city in the world.
Turkey is a test-tube study in how emerging market countries reach developed status. As such, it is subject to the interactions between developed and emerging markets, including hot money capital flows, currency wars and the struggles with interest rate policy and inflation.
This commentary by Jim appeared on the dailyreckoning.com Internet site yesterday sometime---and I thank Dan Lazicki for finding it for us.
A U.S. carrier battle group is repositioning to the Arabian sea in response to a deteriorating security situation in
Yemen, but Pentagon officials denied reports that the move is designed to intercept Iranian ships.
“Ships are repositioning to conduct maritime security operations, they are not going to intercept Iranian ships,” Col. Steve Warren, Pentagon spokesman, said.
The Associated Press sent a breaking news alert reporting the aircraft carrier USS Theodore Roosevelt is steaming toward the waters off Yemen to join other American ships prepared to intercept any Iranian vessels carrying weapons to the Houthi rebels fighting in Yemen.
The carrier, as well as the cruiser USS Normandy, transited the Strait of Hormuz on Sunday night and are now conducting operations in the Arabian Sea, Col. Warren said.
This news item appeared on The Washington Times website yesterday---and I thank International Man's senior editor Nick Giambruno for passing it around.
Kaisa Group Holdings Ltd. became China’s first real estate company to default on its U.S. currency debt, capping a month of distress in bond markets amid an anti-corruption probe and fueling concern that losses will spread.
The default coincides with the expiration of a 30-day grace period on $52 million of missed interest payments on two dollar-denominated bonds, according to a Hong Kong stock exchange statement Monday. Kaisa, based in the southern city of Shenzhen, is struggling to service 65 billion yuan ($10.5 billion) of debt owed to both onshore and offshore lenders while becoming embroiled in President Xi Jinping’s crackdown on graft.
The developer’s problems have rippled across the region’s debt market, where investors starved of yield elsewhere in the world have swooped in to boost returns. As the government’s anti-corruption probes widen, it’s raising concern that defaults will spread after overseas noteholders bought a record $21.3 billion of bonds issued by Chinese property companies.
“It’s been a canary that has been chirping for some time,” Gary Herbert, a money manager who helps oversee about $45 billion of fixed-income assets at Brandywine Global Investment Management LLC in Philadelphia, said in a telephone interview. “This is the beginning of an adjustment period in China that will see a lot of credit investors, who were chasing the promise of higher yields, ultimately disappointed.”
This Bloomberg story was posted on their Internet site at 6:19 a.m. EDT on Monday morning---and I thank Norman Willis for sharing it with us.
China's central bank on Sunday cut the amount of cash that banks must hold as reserves, the second industry-wide cut in two months, adding more liquidity to the world's second-biggest economy to help spur bank lending and combat slowing growth.
The People's Bank of China (PBOC) lowered the reserve requirement ratio (RRR) for all banks by 100 basis points to 18.5 percent, effective from April 20, the central bank said in a statement on its website www.pbc.gov.cn.
"Though the growth in the first quarter met the official target of around 7 percent for 2015, the slowdown in several areas, including industrial output and retail sales, has caused concern," said a report published by the official Xinhua news service covering the announcement.
The latest cut, the deepest single reduction since the depth of the global crisis in 2008, shows how the central bank is stepping up efforts to ward off a sharp slowdown in the economy.
This Reuters article, filed from Beijing, showed up on their Internet site at 12:15 p.m. EDT on Sunday afternoon---and my thanks go out to Harry Grant for bringing it to our attention.
Japan’s population has shrunk for the fourth year running, falling back to a level it was last at in 2000, the government said. More than one in four people are now 65 or older.
The population dropped by 0.17%, or 215,000 people, to 127,083,000 as of 1 October last year, according to the data released on Friday. The figure includes long-staying foreigners.
The number of people aged 65 or over rose by 1.1 million to 33 million and now outnumber those aged 14 or younger by two to one.
Japan’s rapidly greying population poses a major headache for policymakers who are faced with trying to ensure an ever-dwindling pool of workers can pay for the growing number of pensioners.
If you take a cursory glance at any chart regarding the demographics of Japan, you'll see that Japan's population is now in permanent decline. This article appeared on theguardian.com Internet site at 6:02 a.m. BST on Saturday morning---and it's worth reading. I thank reader "F.P." for sending it our way.
After a two-month hiatus, Russia’s appetite for buying gold is back.
The nation increased foreign reserves of bullion to 39.8 million ounces, or about 1,238 metric tons, as of April 1, compared with 38.8 million ounces a month earlier, the central bank said on its website Monday. The 30-ton purchase was the most since September.
Russia, the fifth-biggest holder of the metal, returned to buying gold after taking a break in January and February. The country, which bought gold through the last nine months of 2014, made the purchases to diversify foreign reserves and solve issues related to ruble liquidity, central bank Governor Elvira Nabiullina said in February.
“It’s interesting that Russia is still buying because it’s economy has taken a knock from Western sanctions and from lower oil prices,” David Jollie, an analyst at Mitsui & Co. Precious Metals Inc., said by phone from London. “This sends a very bullish signal to the gold market.”
It's only bullish if JPMorgan et al want it to appear that way---and yesterday wasn't that day, either. This Bloomberg article put in an appearance on their Internet site at 7:59 a.m. Monday morning EDT---and I found it embedded in a GATA release. It's worth reading.
India's gold imports are likely to rise more than 89 percent at 100 tonnes this month compared with last year, mainly due to weakness in international prices and easing of restrictions by the Reserve Bank of India, an industry body said.
Gold imports stood at 53 tonnes during April last year, according to data given by The All-India Gems and Jewellery Trade Federation.
"Until now we have imported nearly 100 tonnes of gold. So we are expecting the total imports to be a little over 100 tonnes," GJF's new Chairman Manish Jain told PTI here.
However, imports will be lower than March, when India had shipped in 159.5 tonnes of gold as jewellers were stocking up in preparation for Akshaya Tritiya and the marriage season, Jain said.
This short gold-related news item showed up on The Economic Times of India at 8:14 p.m. IST on their Monday evening---and it's another article I found on the gata.org Internet site yesterday. It's worth your time as well.
Indian jewelers are banking on what’s considered one of the most auspicious days for gold buying to spur demand in the world’s biggest bullion consumer.
Sales on Tuesday’s Akshaya Tritiya, viewed by the country’s more than 900 million Hindus as a traditional day to buy precious metals, may increase as much as 20 percent from 2014, Manish Jain, chairman of the All India Gems & Jewellery Trade Federation, said by phone from Mumbai on Monday. The nation’s gold consumption slid 14 percent last year.
A resurgence in India’s appetite for bullion may help halt a decline in gold prices for a third straight quarter that was prompted by a withdrawal of investors from gold-backed exchange- traded funds. Demand is getting a further boost after the government ended most controls on imports that helped contain a record current-account deficit and decline in the currency.
“A positive mood exists among the retail sector as Akshaya Tritiya is considered the most auspicious time of the year for purchase of gold,” Jain said. “Gold continues to be a dependable hedge against inflation and is still a valuable purchase” for Indians, he said.
This Bloomberg story from early this morning London time was posted on the mineweb.com Internet site.
China's push to challenge U.S. dominance in global trade and finance may involve gold -- a lot of gold.
While the metal is no longer used to back paper money, it remains a big chunk of central bank reserves in the U.S. and Europe. China became the world's second-largest economy in 2010 and has stepped up efforts to make the yuan a viable competitor to the dollar. That's led to speculation the government has stockpiled gold as part of a plan to diversify $3.7 trillion in foreign-exchange reserves.
The People's Bank of China may have tripled holdings of bullion since it last updated them in April 2009, to 3,510 metric tons, says Bloomberg Intelligence, based on trade data, domestic output and China Gold Association figures. A stockpile that big would be second only to the 8,133.5 tons in the U.S.
"If you want to set yourself up as a reserve currency, you may want to have assets on your balance sheet other than other fiat currencies," Bart Melek, head of commodity strategy at TD Securities, said by phone from Toronto. Gold is "certainly viewed as a viable store of value for an up-and-coming global power," he said.
This very worthwhile story was posted on the Bloomberg website at 10:01 a.m. on Monday morning EDT---and it's another story that was embedded in a GATA release.
Silver stockpiles in China surged this year as the country’s slowing economic growth weakened demand for the precious metal, according to a state researcher.
Inventory monitored by the Shanghai Futures Exchange almost tripled to 341.5 metric tons April 9, the highest in a year, from 122.8 tons in the final week of 2014, according to weekly bourse data compiled by Bloomberg. Stockpiles on the Shanghai Gold Exchange also more than doubled this year to 263.97 tons on April 3, exchange data show.
Chinese silver producers delivered the metal to exchange warehouses amid falling physical demand, said Jin Xiangyun, a senior precious metals analyst at Beijing Antaike Information Development Co. China’s economy expanded at the weakest pace since 2009 last quarter, indicating a deepening slowdown. The global benchmark price has fallen 17 percent in the past year.
“Silverware and jewelry makers said they wouldn’t produce much because of weak demand,” Jin said in a telephone interview April 22, citing their recent survey of producers. “Fabricators usually purchase large amounts of refined silver after Chinese New Year holidays. That didn’t happen for this year.” The break was from April 18-24 this year.
This Bloomberg article from last Friday showed up on the mineweb.com Internet site.
Turns out the book and movie may be an economic fairy tale about America in the late 1800s — and gold.
Well, dear reader, if you are one of the few that doesn't know the real story behind L. Frank Balm's book "The Wonderful Wizard of Oz"---and the subsequent 1939 movie---please take 2:06 minutes out of your busy life---and watch this video that was posted on the businessinsider.com Internet site at 11:49 a.m. EDT on Sunday morning. I thank Roy Stephens for today's last story.
Following February's big bounce back MoM, Consumer Prices in March rose 0.2% MoM (less than the expected 0.3% rise) but it is YoY that is the great news for Americans. CPI fell 0.1% YoY in March (below expectations of unchanged) which means Consumer Prices haven't risen YoY in 3 months. However, while this clear disinflationary signal is persistent, Core CPI continued to rise 1.8% from last year (above the 1.7% consensus) driven by big jumps in the cost of shelter (thank you Fed) and healthcare (thank you Govt); which should send shivers through the risk-bulls as The Fed may be forced to pull rate hikes forward.
On an annual basis, there is now a huge divergence between Core and Headline CPI, mostly as a result of dropping energy prices impacting the headline data.
This longish commentary, with lots of charts and graphs, was posted on the Zero Hedge website at 8:43 a.m. EDT yesterday morning---and today's first offering is from Dan Lazicki.
This tiny Zero Hedge article from yesterday consists of three charts---and although the Dow closed off its low tick, the fact that the the President's Working Group didn't show up to save the day on a Friday is a bad omen for next week. But maybe they were there early enough to prevent a crash yesterday. I guess we'll never know.
This story appeared on their website at 10:09 a.m. EDT on Friday morning---and it's the second offering in a row from Dan L.
We have never, ever, seen the U.S. equity market so disconnected from underlying macro fundamentals.
As the chart shows, the rising stock market is shockingly divergent from the U.S. Macro picture (the greatest divergence ever). This has happened before (in 2006/7) but on a lesser scale, and did not end well.
This tiny story with a must view embedded chart, put in an appearance on the Zero Hedge website at 3:37 p.m. EDT yesterday afternoon---and it's definitely worth a look. That's three in a row from Dan Lazicki.
Global debt has expanded by $35 trillion since the credit crisis and as Lacy Hunt exclaims, "that's a net negative, debt is an increase in current consumption in exchange for a decline in future spending and we are not going to solve this problem by taking on more and more debt." Santelli notes that debt will actually keep growth "squashed down" and points out the low rates in Europe questioning the ability of The ECB's actions to save the economy which Hunt confirms as "longer-term rates are excellent economic indicators" and that is not a good sign for Europe.
"This process is far from over," Hunt concludes, "rates will move irregularly lower and will remain depressed for several years."
Santelli sums up perfectly, "we're all frogs in boiling water," as we await the consequences of central planning.
This 3:29 minute CNBC video clip from 9 a.m. Friday morning is embedded in this Zero Hedge story from 4:35 p.m. EDT yesterday afternoon---and it's another news item courtesy of Dan Lazicki. It's worth your while.
This 4:22 minute video video interview with Maria Bartiromo hosting Axel Weber and Larry Fink was posted on the foxbusiness.com Internet site at 4:22 a.m. EDT yesterday morning---and the stories from Dan just keep on coming. There's also more from Larry Fink and Maria linked here. This CNBC video clip runs for 8:28 minutes---and Dan sent that our way as well.
This 17:03 minute video presentation from Mike was posted on the youtube.com Internet site back on Tuesday---and for length reason had to wait for today's column. I thank Dan Rubock for bringing it to our attention.
The announcement was simple and came as a part of Schlumberger Ltd.’s terrible first-quarter earnings announcement. The carnage of layoffs continues across the oil industry due to low crude prices.
Schlumberger chairman and CEO Paal Kibsgaard said: "In spite of the detailed preparations we made in the fourth quarter, the abruptness of the fall in activity, particularly in North America, required us to take additional actions during the quarter. These included the difficult decision to make a further reduction in our workforce of 11,000 employees, leading to a total reduction of about 15% compared to the peak of the third quarter of 2014."
This very interesting news item appeared on the 247wallst.com Internet site at 6:32 a.m. EDT on Friday morning---and I thank Orlando, Florida reader Dennis Mong for sending it our way. There was also a UPI article about this---and it's headlined "Schlumberger to lay off 11,000"---and I thank Roy Stephens for this one.
Everyday Americans have good reason to celebrate the recent collapse in oil prices. This is the fastest, steepest decline in oil prices since the mid-1980s. Results are already showing up at the gas pump. The price of regular gasoline has collapsed from almost $4.00 a gallon to $1.99 a gallon in some places. For a driver who uses 50 gallons per week, that’s an extra $100 per week in your pocket; enough to buy a new dress or take your family out to a nice dinner. If that new low price sticks, the savings keep coming and it adds up to a $5,000 per year raise. Best of all, the government can’t tax the $5,000. If you got a pay raise, they would tax it, but if the cost of things you buy is lower they can’t tax the savings. What’s not to like? That’s the good news.
Economists assume this extra money in your pocket will immediately be spent. That extra spending might put some money in someone else’s pocket. For example, if you spend your $100 weekly savings from gasoline going out to dinner, you might tip the waiter $15, at which point the waiter has an extra $15, (maybe more if your neighbors are doing the same thing) and he can spend more, and so on. This is the famous “multiplier” effect at work, where an extra amount of spending leads to more spending by the recipients so that the total economic growth, what economists call “aggregate demand,” is higher than the initial spending. More good news.
At least that’s what you’ll hear on television.
When you look beneath the surface, you’ll see some things that are not so good are maybe even bad for your portfolio.
This short essay from Jim Rickards was posted on the darientimes.com Internet site yesterday sometime---and it's the first contribution of the day from Harold Jacobsen.
You’re likely thinking that a discussion of “sound banking” will be a bit boring. Well, banking should be boring. And we’re sure officials at central banks all over the world today—many of whom have trouble sleeping—wish it were.
This brief article will explain why the world’s banking system is unsound, and what differentiates a sound from an unsound bank. I suspect not one person in 1,000 actually understands the difference. As a result, the world’s economy is now based upon unsound banks dealing in unsound currencies. Both have degenerated considerably from their origins.
Modern banking emerged from the goldsmithing trade of the Middle Ages. Being a goldsmith required a working inventory of precious metal, and managing that inventory profitably required expertise in buying and selling metal and storing it securely. Those capacities segued easily into the business of lending and borrowing gold, which is to say the business of lending and borrowing money.
Most people today are only dimly aware that until the early 1930s, gold coins were used in everyday commerce by the general public. In addition, gold backed most national currencies at a fixed rate of convertibility. Banks were just another business—nothing special. They were distinguished from other enterprises only by the fact they stored, lent, and borrowed gold coins, not as a sideline but as a primary business. Bankers had become goldsmiths without the hammers.
This commentary by Doug Casey showed up on the internationalman.com Internet site yesterday---and I thank senior editor Nick Giambruno for bringing it to my attention, and now to yours.
In an interview, Mr. Bernanke said he was sensitive to the public’s anxieties about the ‘revolving door’ between Wall Street and Washington and chose to go to Citadel, in part, because it ‘is not regulated by the Federal Reserve and I won’t be doing lobbying of any sort.’ He added that he had been recruited by banks but declined their offers. ‘I wanted to avoid the appearance of a conflict of interest,’ he said. ‘I ruled out any firm that was regulated by the Federal Reserve.’”
I’m reminded of Willie Sutton’s response to why he robbed banks: “Because that’s where the money is.” I could only chuckle at the New York Magazine headline: “Helicopter Ben Makes it Rain – for Himself.” It’s absolutely laughable that the former Fed chair suggests part of his decision for hooking up with a hedge fund was his sensitivity to public anxieties about the “revolving door” between Wall Street and Washington.
I, at least, would rather see Bernanke working with a traditional regulated financial firm, although his compensation would surely be much less. Especially in this Bubble backdrop with the global leveraged speculating community playing such an integral role, it just doesn’t look good. In an era where public confidence in the Federal Reserve is so thin and vulnerable, why couldn’t Bernanke have just stuck with his post-Fed career of writing, teaching and a few lucrative dinner engagements? After all these years, I still miss Chairman Volcker.
Here's Doug's weekly Credit Bubble Bulletin from late yesterday evening---and I had to dig up myself, as reader U.D. was out wining and dining his girlfriend.
Canadians will go to the polls next October in the first national election since the Conservative Party won a majority government in 2011. There is intense concern among progressive people in the country about the prospects of the Conservatives winning another term in office.
The government of Prime Minister Stephen Harper is moving further and further to the right. It has aligned itself tightly with U.S. foreign policy, including being ‘holier than thou’ in its unconditional support of Israel. It joined the U.S.-led air war in Iraq six months ago and now it is joining the U.S. in expanding that to Syria. It has cemented Canada’s role as a leading climate vandal in the world. It has attacked civil and social rights across the board and is now deepening that attack with the proposed, ‘police-state Canada’ Bill C-51.
This leaves many Canadians favorable to the idea of an electoral and governing alliance between the two, large opposition parties in Parliament—the Liberal and New Democratic parties—in order to defeat the Conservatives. NDP leader Tom Mulcair says he is open to a governing coalition with the Liberals if neither party wins an electoral majority.
But on the increasingly dangerous issue in world politics—the war in eastern Ukraine and accompanying military threats and expansion of NATO in eastern Europe—there is an astonishing unanimity in the Canadian political and media establishment. NATO is embarked on a drive to weaken Russia, with all the risk and folly that entails—including a nuclear danger. The people and territory of Ukraine are being used as war proxies to get at Russia. Yet, there is nary a peep of disagreement in the Parliament in Ottawa.
This is an absolute must read for all Canadians---and once again I apologize profusely---and on bended knee---for the disgraceful and unforgivable behaviour of Prime Minister Stephen Harper et al in Ottawa. My grandfather, who fought in France and Belgium in WWI, would be horrified if he could see how things have turned out. This is a story that, for obvious reasons, had to wait for my Saturday column---and I thank Roy Stephens for sharing it with us. It was posted on the counterpunch.org Internet site on March 31.
An illusion of liquidity has beguiled financial markets across the world and spawned some of the worst excesses seen on Wall Street in modern times, the International Monetary Fund has warned.
Investors are borrowing money to buy shares on the U.S. stock market at a torrid pace and are resorting to the same sorts of financial engineering that preceded the last two financial crises.
"Margin debt as a percentage of market capitalisation remains higher than it was during the late-1990s stock market bubble. The increasing use of margin debt is occurring in an environment of declining liquidity," said the IMF in its Global Financial Stability Report.
"Lower market liquidity and higher market leverage in the U.S. system increase the risk of minor shocks being propagated and amplified into sharp price corrections," it said.
This must read Ambrose Evans-Pritchard commentary showed up on the telegraph.co.uk Internet site on Wednesday afternoon BST---and I thank reader U.D. for passing it around last night.
Fear that Greece could default on its debt and abandon the euro rattled global financial markets Friday.
News that negotiations between Greece and its international lenders are making little progress sent European stock markets down sharply, and the selling spread across the Atlantic. By the close of U.S. trading, stocks across industries were lower, with four of five stocks down. Investors shifted money into German government bonds, a perceived haven in troubled times.
In the U.S., disappointing first-quarter financial results from several big companies fed the selling. After American Express reported revenue that fell short of expectations, investors drove down its stock more than 4 percent.
"The day of reckoning" for Greece is fast approaching, said Uri Landesman, president of investment fund Platinum Partners. "People thought everyone would work it out, but if no one caves, there won't be a deal."
This AP story, filed from New York, appeared on the finance.yahoo.com Internet site yesterday afternoon EDT---and I thank Dennis Mong for digging it up for us.
George Osborne has warned that Greece's battle with Europe's creditor powers is nearing a "crunch" point and threatens to detonate a fresh global crisis if mishandled over the next days and weeks.
The Chancellor said the escalating crisis in Greece is now the biggest threat to the world economy and has become a haunting theme for finance ministers and central bankers meeting at the International Monetary Fund in Washington this week.
"The mood is notably more gloomy than at the last international gathering, and it is now clear to me that a misstep or a miscalculation by either side could easily return European economies to the kind of perilous situation we saw three or four years ago," he said.
"The crunch appears to be coming in May, and it would be a mistake to think that the UK would be immune. Of course, it would be the very worst moment for there to be any confusion about the direction of British of economic policy, or for a change of direction. We need resilience for moments like this," he said.
This is the second Ambrose Evans-Pritchard offering in today's column. This one showed up on The Telegraph's website at 7:00 p.m. BST in London yesterday evening---and it's worth reading as well. I thank Roy Stephens for sharing it with us.
It would appear as if the Minsk2 agreement is failing all along the Donbass frontier at numerous locations with hundreds of incidents of shelling by heavy artillery, tanks and rockets. These incidents have been progressively increasing for a week.
It would be no coincidence that the rhetoric against Minsk2 and the increasing numbers of shelling transgressions by Kiev forces have triggered yet another geopolitical change that has grave implications for peace. This is the Russian sale of the S 300 anti aircraft missile system to Iran. All part of the deteriorating geopolitical position between East and West. The S-300 system, incidentally, is a very efficient one that may prove rather impervious to attacking aircraft - for use around nuclear reactors, for instance. This weapon system sale has been on hold as Russia has tried to find a diplomatic solution to the Iran/USA stalemate. And it follows that Moscow is no longer confident in finding any diplomatic solutions with Washington.
Cohen very accurately has pointed out that Russia has changed its economic and treaty relationships with other countries profoundly due to its standoff with Washington and the E.U., while Washington has done little and the E.U. has suffered greatly. The latest change is with Greece, and it remains to be seen if this will further weaken both NATO and the E.U. On the other hand, Canada has sent a military contingent (perhaps only medical training personal).
This 39:45 minute audio interview was posted on the johnbatchelorshow.com Internet site on Tuesday---and I thank Larry Galearis for sending it our way. It's definitely worth your while if you have the time---and the interest, which you should.
In 2012, British discount airline EasyJet beat Virgin Atlantic Airways in a fierce competition for the rights to fly from London's Gatwick to Moscow's Domodedovo airport, a route that became available when its former operator was swallowed up in a merger. British aviation regulators gave the nod to EasyJet, which hailed the decision as a milestone in its international development.
Now, EasyJet has scaled back its London-Moscow service, from two daily flights to only one in each direction. The move, which took effect in late January, "was in response to the reduction in demand to and from Russia in recent months," an airline spokeswoman says.
The British discounter is one of many airlines curtailing flights to Russia and shelving planned expansion there, as the number of Russians vacationing abroad has plummeted and fewer foreign businesspeople and tourists are visiting the country.
This very interesting story, with the usual negative propaganda twist, appeared on the Bloomberg website at 6:57 a.m. Denver time on Friday morning---and I thank reader "G Roberts" for sending it along.
French Foreign Minister Laurent Fabius on Thursday said France’s decision to suspend the delivery of two Mistral warships to Russia had not changed as the 1.2 billion-euro defence contract appeared to steadily sink.
“The issue has not evolved since the last announcements by the president,” Fabius told FRANCE 24 in referring to François Hollande’s decision in November to keep two Mistral-class helicopter carriers moored at the Saint Nazaire shipyard in western France indefinitely.
“We are at a stage where the decision [to fulfill the contract with Russia] is suspended,” said Fabius at a press conference in Paris.
This news item, which is certainly worth reading, put in an appearance on the france24.com Internet site on Thursday---and once again I thank Roy Stephens for sharing it with us.
Jim Rickards, chief global strategist at West Shore Funds, explains why the topic about including the yuan in SDR's basket could steal the limelight at upcoming IMF and World Bank meetings.
This 4:24 minute interview was conducted by Bernie Lo out of CNBC Hong Kong---and was posted on their Internet site on Thursday evening EDT. It's worth watching. I thank Harold Jacobsen for his second contribution of the day.
While the Chinese are long to bed, futures continue to trade on their exuberant stock market... and it's going south in a hurry. As we noted earlier, the catalyst appears to be a regulatory decision to increase the number of 'shortable' securities (and follow-through from PBOC's day prior demands of brokers to monitor margin trading). Both of these actions were taken as 'signals' that policymakers may be getting nervous about the ebullient wealth creation... Chinese stock futures are now down almost 7% - the 2nd biggest drop in 7 years.
This short must read Zero Hedge article was posted on their Internet site at 9:27 a.m. EDT yesterday morning---and doesn't bode well for the Monday open in the Far East. My thanks go out to Dan Lazicki for finding it for us.
In this episode of China Money Podcast, guest Dr. Marc Faber, renowned investor and publisher of The Gloom, Boom & Doom Report, speaks with our host Nina Xiang.
Dr. Faber shares his thoughts on why China's economic problems are solvable, explains the reasons behind his belief that China is likely to keep its currency stable, and rebukes the argument that capital may be flying out of China for a lack of confidence in the world's second largest economy.
Read an excerpt or watch an abbreviated video version of the interview. Be sure to listen to the full interview in the audio podcast.
This link contains a 7:24 minute video clip, along with a brief transcript, plus the entire 40:52 minute audio interview with Marc---so take your pick. It was posted on the chinamoneynetwork.com Internet site yesterday sometime---and I thank Nitin Agrawal for passing it around.
Last week, we noted the hilarious irony in President Obama’s contention that China was “using its sheer size and muscle to force other countries into subordinate positions.” That of course, is a picture perfect description of US foreign policy and so the statement by the President is effectively an indictment of Washington’s own actions.
Obama’s remarks were made in the context of China’s construction “activities” in the South China Sea where Beijing shares contested waters with the Philippines, Vietnam, Malaysia, Brunei and Taiwan. Essentially, China is building islands atop the Fiery Cross Reef in the Spratly archipelago, which some believe will be used for military purposes.
This very interesting story, with lots of photos, showed up on the Zero Hedge website at 6:55 p.m. EDT on Friday evening---and it's another contribution from Dan Lazicki. Here's a BBC story on the same issue headlined "China 'building runway in disputed South China Sea island'"---and it's courtesy of Roy Stephens.
Last Saturday, Zero Hedge published a long excerpt from what may be the most recent serious treatment of the Bank for International Settlements, the 2013 book "Tower of Basel: The Shadowy History of the Secret Bank That Runs the World" by Adam LeBor---and while it's worth reading, it may not convey much new to people who have been following GATA for more than a few months, since GATA often has called attention to the bank's crucial role in rigging the gold market on behalf of its member central banks.
That is, offensive to democracy as its secret operations are, the BIS is more the servant of its members than their master. The big problem is not the BIS but that the political systems of the bank's major members have been taken over by their domestic financial classes.
To recover its democracy each country will have to wage its own struggle. Satisfying as it might be, nuking Basel tonight wouldn't really accomplish much. The bankers quickly would find themselves another clubhouse somewhere else, equip it with the most sophisticated computers and market-rigging programs, and be back in business in a week, with the trading room of the Federal Reserve Bank of New York picking up the slack in the interim -- at least until some financial news organizations dared to attempt the sort of journalism they've long been leaving to Zero Hedge.
This absolute must read GATA posting, along with the embedded commentary on the BIS, appeared on the gata.org website a week ago---and for length reasons, had to wait for today's column. Reader U.D. beat Chris Powell to this story by six hours and change---and I thank Chris for "all of the above" paragraphs of introduction.
Listen to Eric Sprott share his views on the ongoing debt drama in Greece, a continuously slack economic recovery, his opinion on World Gold Council predictions for Chinese gold demand, and global supply and demand for physical gold.
This 9:16 minute audio interview with Eric, hosted by Geoff Rutherford, appeared on the sprottmoney.com Internet site yesterday afternoon.
The U.S. government must return 10 exceptionally rare gold coins worth millions of dollars each to a Pennsylvania family from which the purloined coins were seized a decade ago, a federal appeals court ruled on Friday.
By a 2-1 vote, the 3rd U.S. Circuit Court of Appeals in Philadelphia said Joan Langbord and her sons Roy and David are the rightful owners of the double eagle $20 gold pieces, after the government ignored their claim to the coins and missed a deadline to seek their forfeiture.
"The government knew that it was obligated to bring a judicial civil forfeiture proceeding or to return the property, but refused," Circuit Judge Marjorie Rendell wrote. "Having failed to do so, it must return the Double Eagles to the Langbords."
Patricia Hartman, a spokeswoman for U.S. Attorney Zane Memeger in Philadelphia, said: "We are weighing our options."
This very interesting Reuters article was picked up by the news.yahoo.com Internet site around 1 p.m. EDT yesterday---and I thank "Roger" for finding it for us.
Only three major assets went up strongly in the past six months: U.S. dollars, Swiss francs and gold.
The dollar/gold correlation was most striking because they had been inversely correlated since 2011 with the dollar getting stronger and gold getting weaker. Suddenly, gold and dollars were gaining strength together against commodities, euros, yen, yuan and most other measures of wealth.
Using our causal inference models, our tentative conclusion is that gold is behaving like money again. This could be an early warning of a breakdown in the international monetary system as a result of persistent deflation and currency wars. Investors are moving to safe havens, and dollars, gold and Swiss francs are at the top of the list.
However, our intelligence collections and inferential models suggest that something even more profound may be going on. Russian and Chinese gold acquisition programs have been going on for years; that story is well known to our readers. But those acquisitions have now passed the point that Russia and China need to have a seat at the table in any new international monetary conference.
This must read commentary by Jim was posted on the dailyreckoning.com Internet site yesterday---and I thank Dan Lazicki for his final offering in today's column.
Gold prices may well, for the time being at least, be driven by ups and downs in U.S. data and Fed interest rate raising speculation, coupled with the occasional impact of some peculiar massive gold trades on the markets, but we do see these things changing as Asia becomes ever more involved in global gold price setting. We are already seeing the start of this, and it is bound to grow so gold probably is at or near its bottom, with better things ahead.
But gold price growth may well continue to proceed at a far slower pace than the precious metal’s adherents would anticipate, although at some point in time an inflection point will be reached (perhaps triggered by some key event) and we should see a big price surge yet again.
As always the question remains as to when this might occur. For the time being its always, as Lewis Carroll had the White Queen say to Alice in ‘Through the Looking Glass’ – “The rule is, jam tomorrow and jam yesterday, but never jam today” which Alice found most confusing saying “It must come sometimes to ‘jam today’” to which the White Queen demurred. But gold investors have to hope that indeed ‘jam today’ will come for the yellow metal and that that day will be soon at hand.
This interesting commentary by Lawrie---and brilliantly written closing paragraph---put in an appearance on the mineweb.com Internet site at 2:47 p.m. BST in London on their Friday afternoon, which was 9:47 a.m. EDT.
The sudden decision to buy EUR and dump USDs (after a slew of Fed speakers spewed their usual spew) has sparked a buy everything trade across markets as bonds, stocks, and crude are surging...
Of course the only things that weren't "surging" in price were gold and silver---and we know why that was the case. This brief Zero Hedge piece, with some excellent charts embedded, were posted on their Internet site at 1:55 p.m. EDT Thursday afternoon---and today's first story is courtesy of Dan Lazicki.
You can add former Treasury Secretary Robert Rubin to the list of those concerned that bubbles might be building in financial markets.
"I don't have a personal view on whether we now have [market] excesses or not," he said at a conference in Washington this week, MarketWatch reports.
"But it certainly is a realistic possibility when you look at the U.S. stock market, which is near all-time highs, when you look at covenant-light and now non-covenant lending, [and] a vast increase in fixed-income [exchange-traded funds]."
Another person with a keen grasp of the obvious. This article showed up on the newsmax.com Internet site at 9:00 a.m. EDT yesterday---and it's courtesy of West Virginia reader Elliot Simon.
Walmart customers can't understand what's plaguing the "plumbing problems" of Walmart stores from Brandon to California.
"Must be a major plumbing problem is all I can say," would-be customer Dale White said as security guards turned him away from the Supercenter on Brandon Boulevard in Brandon.
The retail chain announced Monday that five stores are shutting down - one in Brandon, two in Texas, one in Oklahoma and one in California - due to clogging and drainage problems.
The shutdown blindsided about 400 Brandon Walmart workers who must now find another store to transfer to or receive 60-days pay for the loss of their jobs.
However, 8 On Your Side has found no paperwork and no work done on the plumbing. According to Hillsborough County, Walmart didn't notify the county's permit department either. No one there has heard a peep from Walmart about any major repairs.
On Tuesday, 8 On Your Side stopped by the Walmart, and found no plumber in sight at the Brandon Supercenter, just hundreds of confused and concerned customers.
I had this rather odd story sent to me by a number of readers yesterday---and I must admit that even I don't know what to make of this. I picked a story close to the source in Brandon, Florida. It was posted on the wfla.com Internet site on Wednesday afternoon---and I thank Roy Stephens for sending it.
A former JPMorgan Chase & Co. banker was arrested Thursday on charges he stole $20 million from clients over a four-year period, using some of the money to make personal investments and pay a home loan.
Bail was set for Michael Oppenheim, 48, of Livingston, New Jersey, at $1 million by a magistrate judge who also required home detention and electronic monitoring.
Oppenheim's lawyer, Richard Gamburg, said his client would plead not guilty to charges including wire fraud, embezzlement, investment adviser fraud and securities fraud. He said he expected Oppenheim to be released Friday.
Mike Fusco, a JPMorgan spokesman, said the bank alerted authorities to the crimes and worked closely with officials. He said Oppenheim was a financial adviser at a Manhattan branch.
Criminality is pretty much the modus operandi at JPMorgan---and stories like this are now met with little more than a "what else is new?" look. In actual fact, Jamie Dimon should be in an orange jump suit already. This particular AP story appeared on the abcnews.go.com Internet site at 6:46 p.m. EDT yesterday---and it's the second offering of the day from Elliot Simon.
Warren Buffett is the world's third richest man with a fortune estimated at $71 billion, yet he is able to exploit a loophole and pay a ridiculously small amount in federal taxes.
This week’s Barron’s sheds light on why Buffett has evaded the IRS’ snare for so long.
Buffett, chairman and CEO of the Berkshire Hathaway conglomerate, does not publicize his tax returns. But for the tax year 2010, he reportedly paid $6.9 million on taxable income of $39.8 million.
For many years, he boasted his tax rate was lower than his secretary’s, largely due to the fact he took so little income from Berkshire.
This interesting article put in an appearance on the newsmax.com Internet site at 10:48 a.m. EDT on Wednesday morning---and it's the third offering of the day from Elliot Simon.
The New York branch of the U.S. Federal Reserve, wary that a natural disaster or other eventuality could shut down its market operations as it approaches an interest rate hike, has added staff and bulked up its satellite office in Chicago.
Some market technicians have transferred from New York and others were hired at the office housed in the Chicago Fed, according to several people familiar with the build-out that began about two years ago, after Hurricane Sandy struck Manhattan.
Officials believe the Chicago staffers can now handle all of the market operations that are done daily out of the New York Fed, which is the U.S. central bank's main conduit to Wall Street.
Well, dear reader, if you believe that bulls hit story, I've still got that bridge that's looking for a good home. I lifted this Reuters story from yesterday's edition of the King Report---and this is what Bill King had to say about it: "When the Fed had to save the stock market in 1987, it used the Major Market Index futures, which were traded on the CBOT. Does the Fed want close proximity to the Chicago derivative exchanges for some reason? Is Yellen a closet Cubs fan? This move appears to create another Plunge Protection bunker." That last reason is probably much closer to the truth.
Several years ago, Zero Hedge first, and to our knowledge only, reported that when it comes to unofficially executing trades in the equity market the New York Fed - through a slightly more than arms-length arrangement - does so using Chicago HFT powerhouse Citadel. In other words, while Citadel was instrumental in preserving the smooth, diagonal ramp in stocks since 2009 and igniting upward momentum just as everyone else stared to sell when the Markets Group of the New York Fed called, it was also paid handsomely: after all, nobody checks the Fed's broker commission statement. In fact according to some, indirect Fed compensation to what is the world's most leveraged hedge fund has been in the billions over the past decade.
Well, now it's payback time, and as The New York Times reported overnight, the Brookings Institution's favorite blogger, former Fed Chairman Ben Bernanke, has joined none other than Citadel as an advisor.
According to the NYT, "while Mr. Bernanke will remain a full-time fellow at the Brookings Institution, the new role represents his first somewhat regular job in the private sector since stepping down as Fed chairman in January 2014. His role at Citadel was negotiated by Robert Barnett, the Washington super-lawyer who also negotiated a deal for his book, “The Courage to Act,” which Mr. Bernanke recently submitted to his editor and will be published in October."
This very interesting article was posted on the Zero Hedge Internet site at 6:37 a.m. EDT yesterday morning---and I thank Dan Lazicki for sending it our way. There was another Zero Hedge story from Dan on this subject from yesterday as well---and it's headlined " 175,846,629,768 Reasons Why Ben Bernanke Joined Citadel".
As we reported earlier, the former chief of the IMF Rodrigo Rato, who was succeeded in 2007 by another scandalous figure, Dominique Strauss-Khan, was recently put under investigation by Spanish authorities for money-laundering, benefiting from a tax amnesty to repatriate previously undeclared offshore funds. This is in addition to at least one previous investigation into his role as chairman of Caja Madrid, the failed savings bank, and its successor Bankia.
And, unlike every single JPM banker pretty much ever, moments ago Rato became the second former IMF head in several years (following DSK), to be placed under arrest.
While it is notable that Rato apparently did not have enough cash with which to pay off the prosecuting judge and have the case against him dropped, one wonders what the odds are for Christine Lagarde to complete the trifecta of arrests of people who are in the one position which has become the most cursed in the New Paranormal world.
Because while the IMF was originally created to pay for "bail outs", in recent years its former heads are far more concerned with paying just the "bail."
This Zero Hedge article showed up on their Internet site at 3:21 p.m. EDT on Thursday afternoon---and it's another story courtesy of Dan Lazicki.
Just yesterday, German Finance Minister Schaeuble bent the truth, proclaiming that there was no sign of contagion from Grexit concerns. Today, it appears, he will be eating his words, as Italian, Spanish, and Portuguese bond spreads have exploded higher (up 15-30bps this week) amid the collapse of Greek sovereign and bank bonds.
It's not just Greek Sovereigns that are plunging, Greek Bank Bonds have collapsed...
It's not just Schaeuble that doesn't see any problems. Stan Druckenmiller, the Chairman and CEO of Duquesne Family Office, said that with regard Greece leaving the euro: "Draghi has QE at his disposal. My guess is there won’t be contagion, but even if there is, he can contain it, and soon as market participants see that, you won’t get contagion."
All we need now is for some E.U. leader to claim "Grexit risk is contained," and we know trouble is ahead.
This is another Zero Hedge story from late yesterday morning EDT---and it's also courtesy of Dan L. It's worth reading---and the charts are worth a look as well.
Greece has been pushed a step closer to default and potential exit from the euro after one of its main lenders, the International Monetary Fund, all but ruled out allowing the cash-strapped country to delay repaying the €1bn (£722,000) due next month.
The head of the IMF, Christine Lagarde, said delaying the payments would be an unprecedented action that would only make the situation worse.
Speaking at the organisation’s spring meeting, she said: “Payment delays have not been granted by the board of the IMF in the last 30 years.”
Her intervention is likely to heighten fears that senior policymakers in the US and Europe are preparing for Greece to leave the eurozone.
This Greece-related story appeared on theguardian.com Internet site at 6:54 p.m. BST in London yesterday evening---and I thank Roy Stephens for sliding it into my in-box late last night Denver time. Here's the Ambrose-Evans Pritchard spin on this from 7 p.m. EDT last night---midnight in London---and The Telegraph article is headlined "Grexit dangers mount as Greece's Yanis Varoufakis warns of 'liquidity asphyxiation'"---and it's also courtesy of Roy Stephens.
Bookmakers William Hill have closed their markets on whether Greece will leave the Eurozone during 2015 and on which country would be first to leave the Eurozone.
'Greece had been heavily backed down to 1/5 to be the first to quit the Eurozone, and we'd also been shortening the odds for Greece to leave during 2015. They'd come down from 5/1 to 3/1.' said William Hill spokesman Graham Sharpe, 'It is now looking increasingly likely that they could begin the process of departing very shortly'
'No one is interested in backing Greece to stay in the Eurozone until the end of the year, so we decided to pull the plug on the markets until either the decision to leave is taken, or the crisis point passes and a plan is put in place enabling the country to remain in' added Sharpe.
This brief news item is also from the Zero Hedge website on Wednesday morning---and the first reader through the door with it was Dan Lazicki.
Cash-strapped Greece is planning to resort to drastic measures to stay afloat, as the country's bail-out drama moves to Washington today.
Finance minister Yanis Varoufakis is due to drum up support for his debt-stricken nation when he meets with President Obama at the White House later today.
The meeting with the world's most powerful leader comes as a desperate Athens could raid the country's pensions funds in order to continue paying out its social security bill.
The story appeared on the telegraph.co.uk Internet site at 5:15 p.m. on Wednesday evening BST---and my thanks go out to Roy Stephens for sharing it with us.
A prominent Ukrainian journalist, known for his critical views of Poroshenko's government was shot dead in Kiev on Thursday, in the latest series of suspicious deaths of opposition supporters.
Oles Buzina, 45, a supporter of ex-president Viktor Yanukovych, was shot in the street. Buzina's body was found on the ground nearing his apartment building close to the city center. The head of Kiev’s police department Alexander Tereschuk said that a TT gun was allegedly used in the crime.
According to the neighbors, the journalist was probably shot while jogging. He was found wearing a sports outfit. The 45-year-old was shot by two men in masks who disappeared from the crime scene in a Ford Focus car with either Latvian or Belarusian number plate.
This story was posted on the sputniknews.com website at 7:55 p.m. Moscow time on their Thursday evening, which as 12:55 p.m. EDT in Washington---and I thank Jim Skinner for sending it our way. It's worth reading.
The E.U. foreign service is recruiting a handful of new experts to help counter Russia’s anti-Western propaganda.
The job description, sent out on 20 March to E.U. states’ embassies in Brussels, says their task will be “correction and fact-checking of misinformation/myths”.
It will also involve “development and regular updating of E.U. ‘narrative’ via key messages/lines to take, articles, op-eds, factsheets and info-graphics, with an emphasis on communicating the benefits of the EaP”.
The new staff are to be Russian speakers and to do “analysis/monitoring of reporting on E.U. policies” in Russian language media.
How can this be??? This is so far beyond laughable that it has to be seen as pathetic desperation---and it just remains to be seen how total the failure of this exercise in futility will be. It is, of course, courtesy of Roy Stephens. It was filed from Brussels---and posted on the euobserver.com Internet site at 6:20 p.m. Europe time on Thursday evening, which was 12:20 p.m. EDT in New York.
Having generously (if not obliviously) stepped up to the plate to bail out Ukraine (with open-ended bond guarantees), U.S. taxpayers are opening their wallets again - this time for Iraq. As Reuters reports, cheap oil has ravage Iraq's state finances just as the government faces rising military spending from the war it is waging against ISIS; and so it has decided to issue $5 billion in international bonds. However, Iraq is considering other ways to cover its budget deficit, including asking the IMF (i.e. U.S. taxpayers) for relief funding and also requesting the controversial U.S. Export-Import Bank (U.S. Taxpayers) finance the purchase of 10 planes from Boeing Co, which cost the government $500 million.
Cheap oil is ravaging Iraq's state finances, just as the government faces rising military spending from the war it is waging against Islamic State militants. As Reuters reports, Iraqi Finance Minister Hoshyar Zebari said the government was facing a budget deficit of $25 billion, out of a budget of approximately $100 billion. Iraq's 2015 budget is based on an oil price of $56 per barrel, he said.
Iraq has decided to issue $5 billion in international bonds and is negotiating the terms as one of several measures as it seeks to relieve the pressure of low oil prices on its finances.
Iraq is considering a number of other measures to cover its budget deficit, including asking the International Monetary Fund for relief funding of between $400 million and $700 million, Zebari said.
This news item appeared on the Zero Hedge website at 3:07 p.m. on Thursday afternoon EDT---and once again I thank Dan Lazicki for finding it for us.
President Hassan Rouhani says Iran’s negotiating side in the nuclear talks is the 5+1 group of world powers and not the U.S. Senate or the House of Representatives.
He made the remarks during an address to an audience of people in Rasht, the capital of the northern province of Gilan, on Wednesday.
Rouhani stressed that whatever hardliners in the U.S. and the Senate, as well as the allies of the U.S. in the region say is of no concern to the Iranian nation and administration.
This article put in an appearance on the Tehran Times on Thursday local time---and it's the third contribution of the day from Roy Stephens.
Opium production in Afghanistan has “grown forty fold” in the 13 years of US Operation Enduring Freedom, according to the head of the Russian Security Council. The intervention has “exacerbated existing problems,” rather than solved them.
“Unfortunately, the failed policy of Washington did not solve, but on the contrary exacerbated, the existing problems,” Nikolai Patrushev has said while addressing the heads of the Shanghai Cooperation Organization Security Council.
At the same time, the aims of introducing foreign military to Afghanistan, including the destruction of Al-Qaeda and Taliban, were not accomplished, he added.
According to Patrushev, Afghan extremists’ organizations benefit from lax law enforcement and use their positions in northern Afghanistan to enter neighboring countries in Central Asia.
This interesting story appeared on the Russia Today website on Wednesday afternoon Moscow time---and I thank Norman Willis for bringing it to our attention. And even more disturbing story about the Afghanistan and opium---which was only hinted at in the above RT story---can be found linked here.
Key congressional leaders agreed on Thursday on legislation to give President Obama special authority to finish negotiating one of the world’s largest trade accords, opening a rare battle that aligns the president with Republicans against a broad coalition of Democrats.
In what is sure to be one of the toughest fights of Mr. Obama’s last 19 months in office, the “fast track” bill allowing the White House to pursue its planned Pacific trade deal also heralds a divisive fight within the Democratic Party, one that could spill into the 2016 presidential campaign.
With committee votes planned next week, liberal senators such as Sherrod Brown of Ohio are demanding to know Hillary Rodham Clinton’s position on the bill to give the president so-called trade promotion authority, or T.P.A.
Trade unions, environmentalists and Latino organizations — potent Democratic constituencies — quickly lined up in opposition, arguing that past trade pacts failed to deliver on their promise and that the latest effort would harm American workers.
This New York Times article, filed from Washington, appeared on their Internet site yesterday---and it's another offering from Roy Stephens.
There have been three currency wars in the past one hundred years. Currency War I covered the period from 1921 to 1936. It really started with the Weimar hyperinflation. There was period of successive currency devaluation.
In 1921, Germany destroyed its currency. In 1925, France, Belgium and others did the same thing. What was going on at that time prior to World War I in 1914? For a long time before that, the world had been on what’s called the classical gold standard. If you had a balance of payments, your deficit, you paid for it in gold.
If you had a balance of payment surplus, you acquired gold. Gold was the regulator of expansion or contraction of individual economies. You had to be productive, pursue your comparative advantage and have a good business environment to actually get some gold in the system — or at least avoid losing the gold you had. It was a very stable system that promoted enormous growth and low inflation.
That system was torn up in 1914 because countries needed to print money to fight World War I. When World War I was over and the world entered the early 1920s, countries wanted to go back to the gold standard but they didn’t quite know how to do it. There was a conference in Genoa, Italy, in 1922 where the problem was discussed.
This slightly longish, but must read commentary from Jim appeared on the dailyreckoning.com Internet site yesterday---and it's the final offering of the day from Dan Lazicki, for which I thank him on your behalf.
The International Monetary Fund (IMF) has urged countries to “safeguard” global financial stability following its report that financial risks are on the rise.
According to the IMF’s latest Global Financial Stability Report, since October 2014 financial risks have risen and rotated to parts of the financial system that are harder to assess.
It warned that risks had increased amid a “moderate and uneven” global economic recovery, with rates of inflation “too low” in many countries.
The IMF cited divergent growth and monetary policies as having increased tensions in global financial markets, resulting in “rapid and volatile moves” in exchange rates and interest rates over the past six months.
This very worthwhile article appeared on the ftadviser.com Internet site yesterday sometime
Three more banks are waiting in the wings to join ICE’s gold price benchmark, a well-informed source claimed, without disclosing their identities.
The banks will join JP Morgan Chase Bank, Scotiabank, HSBC, Société Générale, UBS, Barclays and Goldman Sachs in the LBMA Gold Price, which formally replaced the near-century-old London Gold Fix on March 20, bringing the number of participants to 10 once all the necessary formalities have been completed, the source said.
Many had been expecting some Chinese banks to be taking part in the new system when it launched, although some of the newer participants were reportedly struggling to meet both internal sign-offs and the paperwork required to join in time for the first auction.
Industrial and Commercial Bank of China (ICBC), one of the biggest banks in the world and a major participant in the gold market, is widely believed to be one of those interested.
This gold-related news item originally appeared on the bulliondesk.com Internet site on Wednesday---and it found a home over at the mineweb.com Internet site yesterday at 2:59 p.m. BST.
According to the World Gold Council, gold demand in China, which overtook India as the largest user last year, will rise about 25 percent in the next four years as an increasing population gets wealthier.
Consumer demand will expand to at least 1,350 metric tonnes by 2017. Growth may be limited this year after 2013’s price decline spurred consumers to do more buying last year, it said. China accounted for about 28 percent of global usage last year, the council estimated in February, said the London-based World Gold Council.
One wonders from which central bank vaults this new gold demand will be coming from, because current physical demand exceeds world supply by a goodly bit already. This short article, filed from Shanghai, appeared on the bullionstreet.com Internet site at 10:23 a.m. Friday morning India Standard Time---and it's definitely worth reading.
Mortgage apps tumble, Empire Fed slumps, and now Industrial Production plunges... Against expectations of a 0.3% drop MoM, U.S. Factory output was twice as bad at -0.6% - the worst since August 2012 (and almost worst since June 2009). This is the 4th miss in a row. What is even more stunning is that despite the coldest of cold winters that crashed the US economy, Utilities saw their output crash 5.9% - the most in 9 years (explained as follows - largely reversing a similarly-sized increase in February, which was related to unseasonably cold temperatures). Motor Vehicles saved the data from being a catastrophe with a 3.2% rise (following a 3.6% drop In Feb).
This brief Zero Hedge piece, with three excellent charts, appeared on their Internet site at 9:24 a.m. EDT on Wednesday morning---and I thank Dan Lazicki for today's first story.
Two of the US’s largest banks released first-quarter results on Tuesday and gave a mixed picture of the state of the banking industry.
JP Morgan Chase, the US’s largest bank by assets, announced profits had risen by 12% over the quarter, due in part to strong trading results. Wells Fargo, the fourth-largest bank by assets but the largest mortgage lender, announced a dip in profits as it struggled to make money in lending.
JP Morgan reported a profit of $5.91bn, up from a profit of $5.27bn in the same period of 2014. Revenue rose 4.1% to $24.82bn. The numbers were better than analysts had predicted.
The results were powered by a strong performance from the bank’s traditional Wall Street businesses. Trading revenue increased 9% to $5.67bn from the first quarter. The bank also benefitted from the pick-up in mergers and acquisitions. Merger advisory revenue rose 42% from a year ago.
This article showed up on theguardian.com Internet site at 3:25 p.m. BST on Tuesday afternoon, which was 11:25 a.m. EDT. I found it in yesterday's edition of the King Report.
On August 5, 1861, facing rapidly deteriorating economic conditions and a horrible defeat at Bull Run, President Abraham Lincoln signed the Revenue Act of 1861 into law.
It was the first time in US history that the federal government would charge an income tax on its citizens. But Lincoln felt that it was vital to fund what would become one of the most unconscionably costly conflicts in US history.
The original law in 1861 set a flat tax rate of 3% on incomes above $800.
(Using the gold price as a benchmark, this is equivalent to 42.26 ounces, or roughly $50,500 in today’s dollars. Not that there’s any inflation.)
The income tax was tweaked occasionally throughout the war, and it lasted for a few years afterwards to help fund reconstruction.
This commentary by Simon appeared on the sovereignman.com Internet site yesterday, which was Tax Day in the U.S.
As this is federal and state tax deadline day in the United States, it's worth being reminded by Beardsley Ruml, the former chairman of the Federal Reserve Bank of New York and instigator of federal income tax withholding, that, in a fiat currency system, governments can create infinite money, that in doing so they are limited only by potential debasement of the currency, and that taxes thereby have nothing to do with raising revenue but rather are instruments of social policy and control.
Ruml's insightful observations were made in a speech he gave in May 1945 to the American Bar Association that was published in the January 1946 edition of the quarterly magazine American Affairs and headlined "Taxes for Revenue Are Obsolete."
"Final freedom from the domestic money market," Ruml wrote, "exists for every sovereign national state where there exists an institution which functions in the manner of a modern central bank and whose currency is not convertible into gold or into some other commodity. ..."
Ruml cautioned: "The public purpose which is served should never be obscured in a tax program under the mask of raising revenue."
This Tax Day commentary was posted on the gata.org Internet site yesterday---and both this article---and the Simon Black piece above are worth reading by all tax-paying citizens, American or otherwise.
This video interview with Jim took place on the BoomBust show on Russia Today on Tuesday. The interview starts at the 14:05 minute mark---and runs for 8 minutes. I thank Harold Jacobsen for bringing it to our attention.
It’s an amazingly powerful weapon that only the U.S. government can wield—kicking anyone it doesn’t like out of the world’s U.S.-dollar-based financial system.
It’s a weapon foreign banks fear. A sound institution can be rendered insolvent at the flip of a switch that the U.S. government controls. It would be akin to an economic kiss of death. When applied to entire countries—such as the case with Iran—it’s like a nuclear attack on the country’s financial system.
That is because, thanks to the petrodollar regime, the U.S. dollar is still the world’s reserve currency, and that indirectly gives the US a choke hold on international trade.
For example, if a company in Italy wants to buy products made in India, the Indian seller probably will want to be paid in U.S. dollars. So the company in Italy first needs to purchase those dollars on the foreign exchange market. But it can’t do so without involving a bank that is permitted to operate in the U.S. And no such bank will cooperate if it finds that the Italian company is on any of Washington’s bad-boy lists.
This very worthwhile commentary appeared on the internationalman.com Internet site on Wednesday---and I thought it worth sharing.
The White House relented on Tuesday and said President Obama would sign a compromise bill giving Congress a voice on the proposed nuclear accord with Iran as the Senate Foreign Relations Committee, in rare unanimous agreement, moved the legislation to the full Senate for a vote.
An unusual alliance of Republican opponents of the nuclear deal and some of Mr. Obama’s strongest Democratic supporters demanded a congressional role as international negotiators work to turn this month’s nuclear framework into a final deal by June 30. White House officials insisted they extracted crucial last-minute concessions. Republicans — and many Democrats — said the president simply got overrun.
“We’re involved here. We have to be involved here,” said Senator Benjamin L. Cardin of Maryland, the committee’s ranking Democrat, who served as a bridge between the White House and Republicans as they negotiated changes in the days before the committee’s vote on Tuesday. “Only Congress can change or permanently modify the sanctions regime.”
This news item, filed from Washington, put in an appearance on The New York Times website on Tuesday sometime---and it's the first contribution of the day from Roy Stephens.
The days are long gone when Labour was torn apart by ban the bomb. For the party leader, Ed Miliband, the Trident missile is what HS2 is for David Cameron. It is political tokenism, machismo, image candy. Am I big on defence, Miliband said to an interviewer. “Hell, yes.” Look at my weapons.
For Britain (and France), nuclear bombs are to foreign policy what Olympics are to proper sport: chauvinism bereft of intellectual justification or value for money. But what of weapons that actually hurt people? This week the United States was still refusing to lift economic sanctions on Cuba, even while admitting their failure for half a century to bring down the Castro regime. Indeed, the effect of sanctions is Cuba’s chief tourism appeal.
At the same time America and Britain are resisting Iran’s demand for sanctions to be lifted following the inspection of its nuclear plants this summer. In the case of Russia, pressure is on for sanctions to be tightened in response to Putin’s constant provocations along his western flank. They are the “something” that can always “be done”.
Sanctions remain in place against North Korea, Burma, Zimbabwe, Syria, Libya, Somalia, Congo and other weak and vulnerable states, irrespective of whether they achieve any policy goal. They have become the default mode of western diplomacy, the acceptable face of aggression, a casual flick of contempt by the rich against the poor.
This commentary by Simon appeared on theguardian.com Internet site at 6:09 p.m. BST on their Wednesday afternoon---and it's definitely worth reading. I thank South African reader B.V. for his first of two contributions to today's column.
Nothing to see here. The much heralded arrival of deflation failed to materialise this March. For a second month, there was no inflation, or deflation. We’re being told the U.K. is in ‘noflation’ instead.
The news might be something of a blessing for David Cameron, the Prime Minister, as the reading is the last we’ll see from the Office for National Statistics (ONS) before polls open in May.
It means the Conservatives will be spared potentially damaging headlines warning of the ills of negative inflation, which could corrupt its core message of economic competence.
Some commentators will highlight the unrounded figures, which showed the U.K. edged into deflationary territory by the slimmest of margins - with the CPI down 0.01pc in the period. But it’s nonsense to suggest that the ONS’ estimates can be this accurate.
This commentary showed up on the telegraph.co.uk Internet site at 3:29 p.m. British Summer Time on Tuesday---and it's the second story in a row from reader B.V.
German yields cratered today (as DAX flash-crashed into the close). 10Y yields are now at 10.5bps - record lows - and the entire German yield curve is now at negative rates to 8 year maturity. 3-Month German bills hit -42bps!! Must all be a signal of the economic success of Q€ right?
This tiny Zero Hedge story, with two must see charts, was posted on their website at 12:21 p.m. Wednesday afternoon EDT---and I thank Dan Lazicki for sending it our way.
Germany's finance minister said on Wednesday there was no prospect of the euro zone reaching a deal with Athens next week on economic reforms that would unlock bailout funds, potentially leaving Greece perilously short of money.
Both the Greek government and its creditors have said they need to reach at least an outline agreement at an April 24 meeting of euro zone finance ministers in Latvia's capital Riga.
But Athens, which has signaled it may not have enough cash to keep up payments to international creditors in May, has yet to produce a program of reforms that is deemed acceptable.
German Finance Minister Wolfgang Schaeuble told the Council on Foreign Relations in New York that no one expected a deal at the Riga meeting or in the coming weeks.
This Reuters article, co-filed from New York and Athens---showed up on the news.yahoo.com Internet site early yesterday afternoon---and it's courtesy of Orlando, Florida reader Dennis Mong.
Greek banks made more use of so-called emergency liquidity assistance (ELA) in March, increasing their borrowing by 4.4 percent from the previous month as an outflow of deposits continued, Bank of Greece data showed on Wednesday.
Banks switched to using ELA, provided by the Greek central bank, in February after being cut off from the ECB's funding window after the new government stalled the country's bailout program - a condition for access to direct ECB funding.
Emergency funding from the Greek central bank, which is more costly than borrowing from the European Central Bank, rose to 68.51 billion euros ($72.6 billion) last month from 65.64 billion in February, the data showed.
Banks suffered deposit outflows of 24 billion euros over December to February as jitters over the government's standoff with euro zone partners on required reforms prompted savers to withdraw cash to stash at home or to send abroad.
This is another Reuters article, also filed from Athens---and it appeared on the news.yahoo.com Internet site around noon EDT on Wednesday---and it's also courtesy Dennis Mong.
To think it was just recently in September of last year when the S&P, seemingly unaware of the tragic reality facing Greece in just a few months (by reality we mean democratic elections which overthrew the previous regime which was merely a group of Troika picked technocrats), upgraded Greece to B and said "The upgrade reflects our view that risks to fiscal consolidation in Greece have abated."
Well, the risks have unabated, and two months after S&P flip-flopped and downgraded Greece back to B- on February 6, moments ago it downgraded it again, this time to triple hooks, aka the dreaded CCC+.
S&P said that without deep economic reform or further relief, S&P expects Greece’s debt, other financial commitments to be unsustainable. S&P views that Greece increasingly depends on favorable business, financial, and economic conditions to meet its financial commitments.
But, as City AM reports, the biggest news is that the Greek Finance Minister "will on Friday meet with infamous sovereign debt lawyer Lee Buchheit, who has helped numerous countries restructure their debt. Buchheit is a partner at top US law firm Cleary Gottlieb."
This Greece-related article was posted on the Zero Hedge website at 12:10 p.m. EDT yesterday afternoon.
The latest OSCE mission report on the Ukrainian conflict has recorded a spike in violence, with monitors largely blaming Kiev. However, RT’s correspondent says the shooting pales in comparison to what locals went through before the Minsk deal.
“By and large, the ceasefire is holding,” RT’s Murad Gazdiev reports from the Donetsk region in eastern Ukraine. “The exchanges are a shadow of what they were before the Minsk deal took hold.”
Military action between the Ukrainian troops and the self-defense fighters has renewed in the vicinity of Shirokino, following intense strikes from Kiev’s military, the daily report by Organization for Security and Co-operation in Europe (OSCE) stated on Tuesday.
On April 11, monitors witnessed “an escalation of hostilities, with a tank round being fired and small-arms and machine-gun fire exchange between forces in government-controlled [town of] Berdyansk and Shirokino [village].”
This Russia Today news item put in an appearance on their Internet site at 3:43 p.m. Moscow time on their Wednesday afternoon, which was 8:43 a.m. EDT in Washington. I thank Jim Skinner for digging it up for us.
Lt. Col. John Schwemmer is here for his sixth Iraq deployment. Maj. James Modlin is on his fourth. Sgt. Maj. Thomas Foos? “It’s so many, I would rather not say. Sir.”
These soldiers are among 300 from the 5-73 Squadron of the 82nd Airborne Division of the United States Army, about half of them trainers, the rest support and force protection. Stationed at this old Iraqi military base 20 miles north of Baghdad, they are as close as it gets to American boots on the ground in Iraq.
Back now for the first time since the United States left in 2011, none of them thought they would be here again, let alone return to find the Iraqi Army they had once trained in such disrepair.
Colonel Schwemmer said he was stunned at the state in which he found the Iraqi soldiers when he arrived here. “It’s pretty incredible,” he said. “I was kind of surprised. What training did they have after we left?”
Apparently, not much. The current, woeful state of the Iraqi military raises the question not so much of whether the Americans left too soon, but whether a new round of deployments for training will have any more effect than the last.
This essay was posted on The New York Times website on Wednesday---and my thanks go out to Ken Hurt for bringing it to our attention.
Saudi Arabia pumped close to a record amount of crude oil last month, leading the biggest surge in OPEC output in almost four years just as the U.S. shale boom shows signs of slowing, the International Energy Agency said.
The Organization of Petroleum Exporting Countries may extend its biggest output gain since June 2011 into next month as recovery in Libya and Iraq adds to the Saudi increase, the IEA said. Average U.S. oil production of 12.6 million barrels a day in the first six months of 2015 will slide to 12.5 million by the fourth quarter as companies curb drilling, the agency said.
Oil prices are about 45 percent lower than a year ago as OPEC keeps output elevated in response to booming shale production and rising Russian supplies. While the U.S. will still pump an extra 710,000 barrels a day of oil this year, unprecedented reductions in drilling mean growth will be about 25 percent lower than the IEA projected in November, before OPEC embarked on its policy to defend market share.
“OPEC’s core Gulf producers -- led by Saudi Arabia -- appear to be sticking with their defense of market share,” the Paris-based adviser to 29 nations said in its monthly oil-market report. “Lower oil prices and cuts in capex are starting to take their toll” on U.S. production.
This oil-related news item appeared on the Bloomberg website at 2:00 a.m. Denver time on Wednesday morning---and I thank West Virginia reader Elliot Simon for digging it up for us.
Back in November we chronicled the (quiet) death of the Petrodollar, the system that has buttressed USD hegemony for decades by ensuring that oil producers recycled their dollar proceeds into still more USD assets creating a very convenient (if your printing press mints dollars) self-fulfilling prophecy that has effectively underwritten the dollar’s reserve status in the post WWII era. Here’s what we said last year:
Two years ago, in hushed tones at first, then ever louder, the financial world began discussing that which shall never be discussed in polite company - the end of the system that according to many has framed and facilitated the US Dollar's reserve currency status: the Petrodollar, or the world in which oil export countries would recycle the dollars they received in exchange for their oil exports, by purchasing more USD-denominated assets, boosting the financial strength of the reserve currency, leading to even higher asset prices and even more USD-denominated purchases, and so forth, in a virtuous (especially if one held U.S.-denominated assets and printed U.S. currency) loop...
Few would have believed that the Petrodollar did indeed quietly die, although ironically, without much input from either Russia or China, and paradoxically, mostly as a result of the actions of none other than the Fed itself, with its strong dollar policy, and to a lesser extent Saudi Arabia too, which by glutting the world with crude, first intended to crush Putin, and subsequently, to take out the US crude cost-curve, may have Plaxico'ed both itself, and its closest Petrodollar trading partner, the U.S. of A.
As Reuters reports, for the first time in almost two decades, energy-exporting countries are set to pull their "petrodollars" out of world markets this year.
This very interesting Zero Hedge piece was posted on their Internet site with a time-line of 10:42 p.m. last night EDT---and it has obviously been edited, because Dan Lazicki sent it to me six hours before that.
The economy appears to be full of surprises, according to billionaire investor Stanley Druckenmiller. He has one of the best long-term track records in money management and he’s planning for the unexpected.
Most investors predict the Federal Reserve to raise interest rates in September, after keeping them near zero for six years. But Druckenmiller rejects that forecast.
I have no confidence whatsoever that we’ll see a rate hike in September or December,” says Druckenmiller, who is worth $4.4 billion according to the Bloomberg Billionaires Index.
And there are other surprises. He expects oil prices will rise and the Chinese will be smiling with an improving economy. Chinese leaders are forecasting growth this year of 7 percent. That’s the lowest in 7 years, but the Shanghai Composite Index has doubled in the last 12 months as Chinese stocks have soared.
This item appeared on the Zero Hedge website at 4:20 p.m. EDT---and it's the final contribution of the day from Dan Lazicki, for which I thank him.
China-led Asian Infrastructure Investment Bank finalized a list of 57 founding member states on Wednesday.
The announcement came after China accepted the last group of nations that includes Sweden, Israel, Poland and South Africa, reported The South China Morning Post.
Founding members have the right to establish the rules for the bank's activities. They hold other privileges that will not be available to countries that may opt to join the bank at a later point.
The United States and Japan have abstained from joining the AIIB, but South Korea, a key U.S. ally in the region, has agreed to join as a founding member along with Australia, New Zealand, Canada, Britain, France and Germany.
This UPI news story, filed from Beijing, appeared on their website yesterday---and it's worth reading. I thank Roy Stephens for finding it for us.
This 56:08 minute audio interview covers the entire range of topics that Jim always spends time on and, as usual, his comments regarding gold come towards the end.
As the headline says, the interview was conducted on April 9---and was posted on the physicalgoldfund.com Internet site yesterday. I thank Harold Jacobsen for sending it our way.
Massachusetts' top export is not sleek medical devices, cutting-edge machinery, or life-saving pharmaceuticals. It is something more intriguing: gold.
In a state devoid of gold mines, Massachusetts exported nearly $2 billion in gold last year to places such as the United Kingdom, Switzerland, and Hong Kong, according to WiserTrade.org, a Leverett trade research group. And these were not paper transactions but 62,500 pounds of the glittery metal -- roughly the weight of a herd of more than two dozen rhinoceros.
But exactly who is exporting this gold has stumped even specialists studying the Massachusetts economy, who can talk knowledgeably about almost any product that leaves the state, from semiconductors to seafood to colon cancer tests.
As it turns out, much of the gold leaving the state appears to be just passing through. In 2014, Massachusetts was not only the nation's fifth-largest gold exporter but also its fourth-largest importer, accepting about $1.5 billion from countries such as Canada, Colombia, and Mexico.
This interesting gold-related story put in an appearance on the bostonglobe.com Internet site on Tuesday---and I found it embedded in a GATA release yesterday.
In the deepest salvage operation in history, a British-led team has recovered a $50 million (£34 million, €47 million) trove of coins that has lain on the seabed since the steamship carrying them from Bombay to England was sunk in 1942.
The S.S. City of Cairo was torpedoed 480 miles south of St. Helena by a German U-boat and sank to 5,150 meters. Its precious cargo -- 100 tonnes of silver coins -- belonged to HM Treasury. The silver rupees had been called in by London to help fund the war effort.
But they never made it. The steamship's tall plume of smoke was spotted by a U-boat on 6 November 1942 and it was torpedoed.
Ten minutes later, amid efforts to abandon ship, the City of Cairo was hit with a second torpedo which sealed its fate.
The ship and its cargo was presumed lost until 2011, when a team led by British salvage expert John Kingsford located an unnatural object among the ridges and canyons of their South Atlantic search area.
This very interesting article showed up on the bbc.com Internet site yesterday---and it's another story I found posted on the gata.org Internet site.
As many are increasingly coming to terms with the ‘obvious failure of fiat currency’, the inevitable question arises “what next?” Earlier this year, we discussed the possibility of a Chinese- or Russian-currency backed by gold, amid the increasing calls (domestically and abroad) for an end to USD Reserve hegemony; but this weekend, as Bloomberg reports, Lord Meghnad Desai, chairman of The Official Monetary and Financial Institutions Forum, stated that IMF Special Drawing Rights (SDR) should contain some gold to help stabilize the currency.
As Bloomberg reports,
“A bit of gold” could help stabilize SDRs, Lord Meghnad Desai, chairman of Official Monetary and Financial Institutions Forum, says at precious metals conference in Dubai."
“We could ask that gold be nominated as part of the SDR. That is one thing I think is quite likely to happen”
This will be easier if China increases its official gold holdings.
A subject near and dear to Jim Rickards' heart. This absolute must read article, which was originally posted on Zero Hedge, appeared on the etfdailynews.com Internet site on Tuesday sometime---and I found it on the Sharps Pixley website yesterday.